KUALA LUMPUR: Qualitas Healthcare Corp Bhd will make a decision this week regarding the optimum route that will benefit its business, either via an initial public offering (IPO) exercise to raise funds, or to sell its business outright to other healthcare groups, according to a source close to the matter.

“The negotiations are still ongoing between Qualitas and the relevant parties. A decision will be reached by next week (this week) on what will be the best for the company’s future, either to expand on its own or become part of a bigger healthcare group,” a source said.

Contrary to earlier news reports that talks to sell its business have hit a snag, the source maintains that Qualitas is still in active negotiations with no fewer than three bidders for its business, as well as potential cornerstone investors for the IPO plan.

On the estimated value for Qualitas, the source said it is RM1 billion to RM1.2 billion, “based on what was discussed during the negotiations”. Qualitas registered a net profit of approximately RM25 million for the nine-month ended Sept 30, 2014.

According to a Bloomberg report, private-equity owned companies, such as Qualitas, frequently explore an outright business sale and IPO simultaneously.

“The dual-track process, as it is known, can help propel a deal by pressuring buyers to act before a stock offering (IPO) puts the company in public investors’ hands,” said the report.

Late last year, reports had surfaced that Qualitas, a Malaysian-based healthcare services provider, would be seeking a listing on the main market of Bursa Malaysia within the first half of this year. 

Reuters had reported that bankers expected that the IPO will raise up to US$200 million (RM723 million). 

Based on its draft prospectus, Qualitas had plans to utilise 89.6% of its IPO proceeds for strategic investments, acquisitions and general corporate purposes, while the remainder 10.4% of the proceeds was to cover its listing expenses.

The group was previously listed on the Catalist Board of the Singapore Exchange in 2008 via Qualitas Medical Ltd. It was delisted in June 2011, following the acquisition of its entire equity interest by Qualitas Holdings Ltd.

Qualitas’ network of healthcare services includes Malaysia, Singapore, India and Australia, where it has its largest presence.

As at Aug 31 last year, the company owned and operated 109 primary care centres, 19 dental clinics, 10 medical imaging centres and one dental laboratory, with a total of 304 doctors.

Qualitas was founded by Datuk Dr Noorul Ameen (pic), who is also the chairman and managing director of the company. He holds 31.9 million shares, representing a 5.11% equity stake in the company.

For its financial year ended Dec 31, 2013 (FY13), Qualitas reported a net profit of RM14.13 million, which was 50.4% higher compared with RM9.39 million in FY12. Meanwhile, revenue was RM249.14 million compared with RM157.24 million in FY12.

This article first appeared in The Edge Financial Daily, on March 2, 2015.